 LaGuard says ECB likely to exit negative rates by end of September. The European Central Bank is likely to start raising interest rates in July and exit sub-zero territory by the end of September, President Christine LaGuard said. �I expect net purchases under the aspect to end very early in the third quarter,� she said in a blog post Monday. �This would allow us a rate lift-off at our meeting in July, in line with our forward guidance. Based on the current outlook, we are likely to be in a position to exit negative interest rates by the end of the third quarter.� With inflation running at almost four times the ECB�s 2 percent target, momentum in the Central Bank�s governing council has been building to raise the deposit rate from its current level of minus 0.5 percent in July. LaGuard�s comment suggests two increases of 25 basis points each at the July and September policy meetings. While Dutch Central Bank chief-closnot last week mentioned the possibility of a half-point rate hike if required, LaGuard has repeatedly said that policy normalization will be gradual, and reiterated that sediment again on Monday. �This means that it is sensible to move step-by-step, observing the effects on the economy and the inflation outlook as rates rise,� she said. The euro advanced against the dollar after her comments, rising as much as 1 percent to 1.0674, the highest level in almost a month. Ten-year German bonds erased earlier gains, with yields rising two basis points to 0.96 percent. Russia�s invasion of Ukraine has sent commodity prices higher while increasing uncertainty about the outlook and debting confidence among businesses and households. That�s created a difficult situation for policymakers as any measures to contain inflation also threaten to slow activity further. Raising the deposit rate by 50 basis points through September would still put the Central Bank behind peers like the Federal Reserve and the Bank of England, who�ve increased borrowing costs this year to quell surging inflation. Weak Euro �That�s also helped weaken the euro in recent months, compounding the challenge for ECB officials because that makes imports, a key source of current inflation, more expensive. LaGuard, who said she wanted to clarify the path of policy normalization that lies ahead of us with her blog post, noted the ECB needs to keep its options open because of uncertainty about future price growth. Equity is important to allow us to re-optimize the policy path as we go, especially as key variables underpinning that path will only become clearer with time, LaGuard said. That could also mean withdrawing monetary stimulus promptly to stamp out the risk of a self-fulfilling spiral. The prospect of the first rate hike in more than a decade has increased concern about a potential bond market fragmentation among the 19 members of the currency block, as governments increase their debt loads to help the economy deal with the COVID-19 pandemic. LaGuard reiterated that the ECB would also be able to design and deploy new instruments to make sure that monetary policy is properly transmitted through the euro area. ECB�s visco says July �perhaps right to a set time for first hike.� Stagflation danger stocks global economy beset by war fallout. New mix of ECB hikes supported by fiscal aid augers bumpy era.